TY - JOUR
T1 - Related party transactions, benefits of control and earnings quality
AU - Tong, Yan
AU - Wang, Huacheng
PY - 2008/6
Y1 - 2008/6
N2 - Controlling shareholders pursue benefits of control (private benefits and shared benefits) via related party transactions, which result in different levels of earnings quality. Using data from all A-share listed companies in Shenzhen and Shanghai stock markets in the year 2001 and 2002, we found that when the share ratio of controlling shareholder is less than 50%, they prefer pursuing private benefits of control via related party transactions, giving rise to deterioration in earnings quality. By comparison, when the share ratio is more than 50%, controlling shareholders prefer pursing shared benefits of control through related party transactions, which improve earnings quality as a result.
AB - Controlling shareholders pursue benefits of control (private benefits and shared benefits) via related party transactions, which result in different levels of earnings quality. Using data from all A-share listed companies in Shenzhen and Shanghai stock markets in the year 2001 and 2002, we found that when the share ratio of controlling shareholder is less than 50%, they prefer pursuing private benefits of control via related party transactions, giving rise to deterioration in earnings quality. By comparison, when the share ratio is more than 50%, controlling shareholders prefer pursing shared benefits of control through related party transactions, which improve earnings quality as a result.
KW - Benefits of control
KW - Controlling shareholders
KW - Earnings quality
KW - Related party transactions
UR - http://www.scopus.com/inward/record.url?scp=48749083618&partnerID=8YFLogxK
U2 - 10.1007/s11782-008-0011-x
DO - 10.1007/s11782-008-0011-x
M3 - Article
AN - SCOPUS:48749083618
SN - 1673-7326
VL - 2
SP - 187
EP - 203
JO - Frontiers of Business Research in China
JF - Frontiers of Business Research in China
IS - 2
ER -